For many of us and the cryptocurrencies around us, this time it feels different. The tokenization of financial assets has arrived in ways we have never seen before.
When we charge ahead, it is important to shrink and slow down – our industry is not well known – and pick up today’s snapshots and where we are going tomorrow.
Stablecoins is Tokenization’s first fan
While tokenization is revolutionary for financial markets, its adoption has evolved to date. First, we use Stablecoins as a more efficient payment method. We then use money market funds as a more efficient store of value.
What’s next? Structured credit plus private funding. Like the previous wave of adoption technology, tokenization will appear slowly at the same time. Fixed: We are about to enter the vertical slope of the S-Curve.
Since the last crypto market cycle in 2021, Stablecoins has shown a clear product market fit. More than $250 billion In recirculating supplyStablecoins continues to demonstrate long-term demand and utility. These include Tether and USDC for cross-border payments through companies such as Moneygram, Stripe, PayPal and Felix; overseas dollar channels for emerging economies and people with weaker monetary policies such as Nigeria, Venezuela, Turkey; as the main trading pairs for crypto transactions, including Bitcoin and Ethereum. Regulatory clarity, especially the passage of the U.S. Genius Act, covers stable regulations and can only accelerate this trend. The large demand for Circle stocks after the IPO is another positive signal.
Tokenized money market funds bring technological and financial upgrades to store on the value chain. Market leaders including Buidl, Benji, Ondo and others have shown that the demand for risk-free interest rates Onchain is clear.
This means not only as a collateral and a tool for the Treasury, but also as a replacement for crypto-local players who need to command liquidity. While the initial version provided a hybrid structure that matched fund tokens to reflect traditional transfer agents and off-chain stocks, we began to see tokens locally issued across the industry.
What’s the next step in tokenization?
Given that tokenization indicates a more efficient method of moving and storing value, what parts of the industry are what? First, we have seen industry leaders showcase utility through transparency, Fefi Lending and liquidity improvement by industry leaders, Hamilton Lane, with the Republic’s Markup Fund, the multiple chain funds provided by WisdomTree, and others.
Today, the value that tokenization will bring to different funding structures will only scratch the surface possible, but as Defi and Tradfi overlap more and more, utilities may stand out.
Structured credit is an ideal candidate for tokenization. Traditionally, it can be complex, opaque, involve multiple opponents, and issuance and operation can be relatively expensive. For example, smart contracts not only simplify debt services for the loan pool, but also follow pre-programmed waterfalls approved by each investor.
By placing it with immediate solution within the structure, the cost basis may drop significantly. Moreover, since the structure is a chain, we will not lack the transparency that plagues the financial system. At the issuer’s discretion, holders of chain structure credit products can see the basic performance in real time, i.e. 24/7.
This transparency is not only a transformative way for regulators to better monitor potential risks, but also increases collateral acceptance by standardizing and providing lenders with more information.
This combination of value and information will also mean the liquid secondary market for these assets. While larger traditional institutions can offer some of these benefits, such as transparency or its own secondary market, use may blend all of these benefits and standardize them outside today’s walled gardens.
Token Stock
Discussions about token stocks have taken off in 2025. Although stocks have been tokenized previously, stocks have been held with the Security and Exchange Commission’s Crypto Commission’s working group for the Security and Exchange Commission, prompting adoption timelines. Superstate, Kraken and our Galaxy we have all announced stock tokenization plans to continue to push the industry forward.
Despite the progress the industry has made, there are still some challenges. The United States still lacks the required stable infrastructure bill, although the day passed in the Senate was a clear step. Solving KYC/AML remains a barrier, making the technology impossible to adopt on a large scale; private chains are too restrictive, and not having enough public chain structure for KYC/AML is challenging for Tradfi.
Instead, the industry will have to land in the middle, leveraging our financial system to capitalize on today’s regulatory and trust-based KYC policies to leverage the benefits of public chain stores.
Education about technological potential is also an obstacle. The industry must continue to emphasize that material use cases and tokenization can bring not only traditional finance, but also entirely new opportunities and structures that do not exist.
Important points
What should we take away this time?
First, we have come a long way from the fact that the initial Bitcoin transactions and Ethereum smart contracts formed the cornerstone of Crypto. Now, the industry has partnered with prominent figures in finance, payments and technology that lead today’s global economy.
Second, we were at the bottom of the second inning – we put forward some points on the board, but that was just the beginning. Large-scale adoption will require the combination of the revolutionary interests of the technology with eternal trust, which has always been the cornerstone of the financial industry.
The balance of technology and trust is at the heart of realizing the potential of tokenization in finance: the value of information done for the Internet.
